American politics

The debt ceiling

Whom to blame

I WAS sorry to see Gary Johnson, the agreeably modest former governor of New Mexico, and Republican presidential candidate, repeating one of the absurder Republican talking points. He says:

Having served as a Republican governor in a Democrat state with a Democrat legislature, I understand the challenge of divided government. I would have voted against the House-passed debt limit bill; it simply does not cut enough spending. But at least the Republican House came up with something and voted on it.

The President and the Senate, on the other hand, have done nothing except hold news conferences and lay blame on everyone from the Tea Party to George W. Bush. 'We don't know what we want, but this isn't it' is not the approach to leadership the American people want and deserve. The federal budget can be balanced, and it can be balanced now, if only our elected leaders in Washington would actually show some courage and commitment to putting our financial house in order.

Er, hang on. The "something" the Republican House has come up with is a non-solution (since the Senate cannot buy it) to a problem entirely of the Republicans' own making. The reason for this crisis is that instead of just raising the debt ceiling in the customary way so that the government can pay the bills Congress has already run up, the Republicans decided to point a pistol at the American economy and threaten to pull the trigger if they did not get the spending cuts they wanted.

Sure, America needs to tackle its burgeoning entitlement programmes. But not now, when cutting spending will make an insipid recovery worse, and more especially not like this, hijacking a routine procedure and using it to bring the country to the edge of downgrading or default. At least the Republicans have done something? Gimme a break.

Here is a thought to ponder. We go to war twice in the space of two years. Major theater war on two fronts and for the first time in the history of this nation we do so completely on credit. Tax cuts in 2001 and 2003 that not only had an immediate impact on debt but long term since they still exist and no way to raise revenue through taxes to support war and expanded national security spending. Now Tea Party and completely brain dead Republicans try and blame Obama and Healthcare Law on the totality of the current 13/14 trillion in debt. Check out the latest Los Angeles Times article on how we get to where we are and you will see that it is actually the 2000-2008 policies that allowed this debt to explode to the levels we see today. Right now if any of these representatives had any common sense they would raise the debt limit through 2014 and then take the Gang of Six proposals and the Debt Commission report and figure out a long term plan to eliminate the debt. But no...we have playground grandstanding instead. Obama takes blame in my opinion for not being able to communicate effectively at a critical juncture. For all of his great speaking skills, he seems stuck on pointing fingers at corporate jet owners, hedge fund managers and the insanely rich instead of documenting a long term plan that would include entitlement reform, reforms for the defense department and a re-write of the tax code.

Are you saying that the Republicans should have done something about it when the budget was being passed, rather than now? I can actually buy that point of view (but keep reading).

Or do you really see no connection between spending too much and having to repeatedly raise the debt ceiling? Do you think they're totally disconnected from each other? They're not. They're linked intimately enough that the Republican action is not this out-of-left-field, what-could-they-possibly-be-thinking action that many are portraying it as.

In fact, I could suggest that the debt is a multi-year accumulation of deficits, and addressing that now (in the debt ceiling debate) is at least as valid as trying to address it in one year's budget. (The Republicans still should have addressed it in the budget, as well.)

"Sure, America needs to tackle its burgeoning entitlement programmes. But not now, when cutting spending will make an insipid recovery worse"

Epic fail. Your Keynesian demagoguery is conspicuously stupid. Only a deluded person can believe that cutting entitlement spending would make the "recovery" worse (assuming there is one). You might be perfectly fine with forcing future generations pay for the tens of trillions in unfunded liabilities (by over taxing work and subsidizing nonwork). But I conjecture that most Americans don't feel that way.

Keynesian view: Federal Squandering = economic recovery. It's like creationism within economics: Never been demonstrated. Never been observed.

Keynesians also said that there was a long-term trade off between inflation and unemployment in the 60s. And we got Stagflation in the 70s. And the "crazy" republicans named Ronald Reagan and Milton Friedman had to convince Paul Volcker to bring it down.

Back to the 21st century, the recession ended in June 2009; and after more than two years of Keynesian policies -- which by their own predictions should have kept unemployment below 8% -- unemployment now is just 1% below the peak of 10.2%.

The House bill is merely a vehicle for running the "Balanced Budget Amendment" idea up the flagpole to see who salutes. It is a bonehead idea, because although we have only rately had balanced budgets, the federal debt was approximately constant in inflation-adjusted dollars for 35 years after WWII, and declining relative to GDP. These were mostly prosperous years. It wasn't until the first Reagan budget of 1982 that the debt began rising relative to GDP, which was the beginning of our present troubles.

I think there is fundamentalism among the republican congress women and men. Ideology before practical considerations backed by experience and economic theory. The US is, for some reason, trying to commit suicide and bring the rest of the world with it to something similar. The President, the executive, has yielded much to the republican conditions to the point of having almost abdicated o their electoral promises on the face of that extortion. But that is not enough for the republican fundamentalists.

If they know what they want it is a mistery for me. I cannot simply understand their attitude.

Nonsense. Fundamentalism. Madness. Are the words that come to my mind.

"These are two very good reasons not to raise the debt ceiling without spending cuts. After all, if not now, then when?"

Presumably when there's an economic recovery, or they hold the actual votes in government to pass their own agenda, or when they haven't just run an election promising to protect medicare and social security.

"Only a deluded person can believe that cutting entitlement spending would make the "recovery" worse "

Who could possibly believe that people spending less money could have a negative effect on the economy? People who've actually thought about it or looked at nations where severe cuts are being implemented I suppose.

When has Keynesism worked? Gee, perhaps where it was created --The Great Depression. You may have heard of it, though I suppose you have some bizarre alternate theory for economic recovery dovetailing with the growth government stimulus and programs.

I mean, if you can revere Reagan while complaining about deficits... you can pretty much believe anything.

Of course, filibustering a budget doesn't cause default on the United States' debt now does it? Seems to be a pretty big deal to me.... and everyone else on the planet.

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A default would trigger a massive contraction in the world economy, and GOP would have a decent chance of going the way of the Federalist party for it's insanity. They certainly never campaigned on a 30% cut to Medicare, Social Security, and leaving unfunded soldiers in foreign nations. But that's what they're doing.

Rewt, the Bush tax cuts were created as a ten-year plan. Congress sets long term budget priorities all the time. As I've said before, this looked like a clever way for a party with only one house to get some motion on bigger issues of concern to them but then they got that and said no. And then they realized they didn't know what they could say yes to. And then they said yes to something that they knew wouldn't go anywhere that makes the other party look partly responsible for what might just happen next week.

If Lexington is saying that the Republicans should have done something about it when the budget was being passed, he's right. If you're saying this was worth a try because the budget discussions weren't working, I can actually by that point of view (but keep reading.)

The reason, it seemed, that we got a bad budget is that the Republicans weren't yet all in on deficit reduction and the Democrats weren't yet all in on deficit reduction. The GOP spent most of the budget discussions chasing tax cuts while the Democrats tried to protect too much spending. That's right where we are now and where we'll be when this whole folly is done. In between, we spent a little time doing actual deficit reduction, primarily through spending cuts.

I've seen nothing to persuade me that this crisis wasn't ginned up by the GOP who let it get out of control. I always respect what you have to say and enjoy your comments but I can't help thinking that anyone defending the GOP in this particular situation is showing an unwillingness to face that on this occasion, the people being persecuted really did the crime and genuinely deserve the scorn.

The heads of the GOP Congresscritters, and those who voted for and support them, do not have their heads buried in the sand but in a darker and more odorous place.

They plan to destroy the US if they don't get their way. This will also destroy them and perhaps discourage such infantile foolishness in the future. It is not, however, worth destroying the country to get rid of them any more than it would be worth burning down a house to get rid of roaches.

Yes, it's all the Republican's fault. Obama running up $1.5T annual deficits as far as the eye can see has nothing to do with it does it, Lexington? His $840B "stimulus", his huge new entitlement, his unchecked spending on anything that moves - all of that has nothing to do with America's debt crisis does it? For the beloved One (by the Euro Left) we can just borrow and borrow and borrow...until we are Greece that is. $14.3T in debt, asking for another $2.4T and absolutely no plan to reduce it. You think that might have just a little bit to do with it?

As to why the Republicans refuse to simply raise the debt ceiling, all you have to do is look at a Gallup poll from the second week in July 2011: 42% of Americans what their Congressmen to vote against the debt ceiling, while only 22% of Americans favor raising the ceiling.

And there is the little matter of the 2010 mid-term election: the Republicans see the blowout election as a mandate to cut spending.

These are two very good reasons not to raise the debt ceiling without spending cuts. After all, if not now, then when?

To find the blame for this, you have to go back 30 years. How did we end up with a deficit at 40 percent of total spending, and a huge trade deficit despite huge unemployment, with no money set aside for the old age of the most entitled generations in world history?

A continuation of this trend, with those over 55 and those who have accumulated the false wealth held harmless as our future is sold off piece by piece, is in fact worse than a repeat of the 1930s. I'd prefer the collapse to the deal, particularly if the Republicans are blamed, and NOT because of anything that has happened in the past two months.

And I'm well off, and about to reach age 50. Everyone younger, and less well off, should be chanting let it burn and let them share our fate! I'm doing so on behalf of my children and community.

Got for it Tea Party! If Obama had balls and sense, he'd be saying he same thing. The budget gets balanced, on their terms, for 15 months, and there is no federal response to a financial collapse that drastically reduces the wealth inequality that has drastically increased. And then we decide if perhaps a little more in tax might be worth it for a little more in benefits.

As to the question of whether G.W.Bush was the stupidist president or not, I think the answer is now clear. The real question however is how all this fits into the grander scheme and timeline. Will GDP bounce back? or will cuts to Govt spending trigger lower GDP, and a wider recession? This is the gamble the Rep's arent addressing, for if it happens, you can forget about 100%+GDP debt levels, start thinking 150%+...it will make their current spending cut obsessions, seem princess like.